When
the now infamous “F--- the EU” conversation between American diplomats
first surfaced this month, attention was focused on the presumed Russian
leakers’ Cold War-era “tradecraft” and the impolitic use of the F-word.

But
taking a closer look at the substance of the conversation between U.S.
Assistant Secretary of State Victoria Nuland and U.S. Ambassador to
Ukraine Geoffrey Pyatt now that the turmoil in Ukraine is center-stage
reminds that the discussion focuses on the disparate opposition leaders
and how the U.S. might play them to suit American interests.

Much of the leaked conversation centers around Vitali Klitschko,
the former heavyweight boxing champ and a major leader of the
opposition movement, who Nuland believes is essentially not ready for
the big leagues.

The diplomats discuss "personality management" of Klitschko and other opposition leaders Arseniy Yatseniuk and Oleh Tiahnybok.

Pyatt
replies, “I think we're in play. The Klitschko piece is obviously the
complicated electron here...” He explains how he wants Nuland to have a
have a phone call with the former heavyweight.

Nuland replies: “I don't think Klitsch [Klitschko] should go into the government. I don't think it's a good idea.”

Pyatt replies: “Yeah. I
guess... in terms of him not going into the government - let him stay
out and do his political homework and stuff. I’m just thinking in terms
of sort of the process moving ahead, we want to keep the moderate
democrats together. The problem is going to be Tiahnybok [Oleh, leader
of the far-right Svoboda Party] his guys and I'm sure that's part of
what [President Viktor] Yanukovych is calculating on all of this."

Nuland
breaks in: “I think Yats [Yatseniuk] is the guy who's got the economic
experience, the governing experience. He's the guy. You know, what he
needs is Klitsch and Tiahnybok on the outside. He needs to be talking to
them four times a week, you know. I just think Klitch going in, he’s
going to be at that level, working for Yats and Yuk, it's just not going
to work.”

Pyatt replies: “Yeah, no. I think that's right…”

Later
Pyatt adds: “I think just knowing the dynamic that's been with them
where Klitschko has been the top dog, he's going to take a while to show
up for whatever meetings they've got and he's probably talking to his
guys at this point. So I think you reaching out directly to him helps
with the personality management among the three…”

The
conversation goes on to discuss a new U.N. envoy and the infamous “F---
the EU” comment, conveying frustration with the European Union's
efforts to find a diplomatic solution to the burgeoning crisis.

martes, noviembre 26, 2013

..Not only in Israel, but among Arab allies of the U.S., the belief that America is no longer a reliable partner in the Middle East is gaining momentum. After the failures of American plans in Iraq and Afghanistan, the countries of the region have reason to doubt the ability of the U.S. to guarantee a predictable outcome in the Middle East. Now it is unclear how the situation in Egypt will play out, what awaits the region in connection with the nascent revival of relations between America and Iran, how...

sábado, noviembre 09, 2013

Talks between Iran and six world powers on Tehran's nuclear program entered their third day in Geneva on Friday, despite fierce opposition from Israel over negotiations that Prime Minister Benjamin Netanyahu calls the ‘deal of the century’ for Iran.

Secretary of State John Kerry and counterparts from Britain, France and Germany negotiating with Iran consulted on how to resolve the obstacles at the talks, including differences on ways to reduce Tehran's ability to make atomic weapons using plutonium and enriched uranium

Tehran stands to gain access to nearly $50 billion if the Obama administration decides to free up $12 billion of frozen Iranian assets in the US, inevitably followed by Europe’s release of another $35 billion. The White House was reported Friday, Oct. 18 to be weighing this plan as a means, debkafile reports, to ease sanctions, without asking Congress to repeal or amend sanctions laws. This plan would fly in the face of calls by Congress and Prime Minister Binyamin Netanyahu for harsher measures against Iran after failed diplomacy in Geneva.

Canada threatened on Wednesday to take the European Union to the World Trade Organisation over its plans to label Canadian oil sands as dirty, but promised not to delay a bilateral trade pact.

The issue has overshadowed relations as Canada and the EU try to deepen economic ties through a trade deal that could generate $28 billion a year in new business and commerce.

Canadian Natural Resources Minister Joe Oliver, on a week-long lobbying trip to Europe, accused the EU of breaking international trade rules and discriminating against Canadian exports.

"We are going to take whatever action we need to, and we may well go to the WTO," Oliver told a news conference. "We will defend our interests vigorously."

The WTO has the power to order the EU to change its rules if they are found to be unfair, but the process is lengthy.

Canada's oil sands are the world's third largest crude reserves, but most are in the form of tar sands. Extraction from the clay-like deposits takes more energy than pumping conventional oil and results in higher carbon emissions.

The European Commission has proposed labelling oil from tar sands as "highly polluting" to help implement an EU goal to cut the carbon intensity of its transport fuels by 6 percent by 2020.

The Commission denies that it is singling out Canadian oil as its proposal also defines other unconventional sources of oil as carbon-intensive.

Asked whether the trade deal could be signed even if the EU goes ahead with its fuel labelling, Oliver said: "Yes ... These issues are entirely separate."

He said Canada did not intend to use the issue as a bargaining chip.

Talks on a free trade deal began in 2009 and are in the last stage, diplomats say, but have stumbled over a series of issues.

Canada, which is anxious to find new markets for its oil and gas outside the United States, argues that Europe should embrace it as a stable, reliable energy producer.

Yet many in the environment lobby say long-term investment in new heavy crude infrastructure and development would badly undermine attempts to limit climate change.

Twelve climate scientists and energy experts said in a letter to Oliver this week that Canadian policy was delaying the transition to an economy that was less reliant on carbon.

"We are at a critical moment," the group, among them academics from Harvard in the United States, and from British Columbia and Queen's universities in Canada, wrote in the letter, seen by Reuters. "The responsibility for preventing dangerous climate change rests with today's policymakers."

A report on Wednesday indicated the European Commission's tar sands proposal would shift investment towards lower-carbon oil sources and could save up to 19 million tonnes of carbon dioxide per year - equivalent to removing 7 million cars from Europe's roads. (Additional reporting by Barbara Lewis; Editing by Kevin Liffey.

lunes, abril 01, 2013

I have served as a flag-man among the pirates of offshore banking. I know Cyprus well and have sailed into Larnaca in the dead of night, in small boats, on business. But in this story, the good guys and bad guys are not who you think they are.

Let me show you why the plunder of Cyprus is probably one of the most brilliant acts of wholesale theft the world has ever known, why the stolen treasure may be thousands of times greater than has been suggested, and why the names of the victims, and the full value of the loot, will remain a mystery forever.

In the days of wooden ships and iron men, colonial empires pillaged entire populations. At sea, independent traders, merchantmen, privateers and pirates (broadly, those who operated without paying tribute to to one crown or another) were masters at avoiding the powerful warships of unfriendly nations. Of great importance in this effort was knowing which flag to fly, when, in order to avoid capture.

Things are not so different today. Powerful governments seize and confiscate assets, sometimes justly or “legally,” sometimes not. At sea, still, owners select men like me to analyze a host of variables and carefully select the flags and attendant legal and financial structures that will best protect their vessels and other assets. The stakes are high. The company is good. It is nice to know John Galt.

In order to understand what has happened in Cyprus, you must first conjure, in your mind, images representing a truly colossal amount of money.

Briefcases full of cash? Think shipping containers. Bafflingly intricate networks of corporate and private wealth, shell companies, holding companies and staggering transfers between these entities and others. Think private planes and mega-yachts, too – the works – and multiply this kaleidoscope by thousands of beneficial owners, major shareholders and top executives all over the world.

Now you have a glimpse of the dynamic, multilayered, nebulous network – almost completely opaque by design – whose few points of convergence included Cyprus.

As in a sea battle, exposure is dangerous. When envisioning riches, Hollywood might draw our imaginations to Swiss vaults, mahogany corridors and bars of gold, but much of that stuff – the places, the mechanisms, the glitter – is old news. As for the toys, practically speaking, they are merely exposed, and therefore dangerous, assets. But seizing boats is a time-consuming, complicated business for government raiders, unless they lead to greater treasure. (The boats are almost always left to rot, which is why, when appropriate, they are “rescued.”) From a business perspective, the attention-getting trappings of a producer’s affluence only matter if they draw the wrong kind of attention. What is critical is the money. The target wants to keep as much of it as he can, legally or otherwise. The empires want to take it, and they determine what is legal.

It is impossible for the media to convey, in pictures, the extent of the wealth harbored in Cyprus. Quiet, dusty Nicosia and Limassol aren’t remotely glamorous. Here, Greek efficiency meets British hospitality. Leyland cars putter along the Larnaca waterfront. Middle-class Holiday makers ponder the remains of the Empire over warm beer and kleftiko. Every once in a while, a tourist plunges to his death in a rented motorbike. Cyprus would make a dreary set for a movie about such an astonishing robbery. It was a place to avoid that kind of attention. This isn’t where the world’s elite spent their money; it’s where they kept it. Like a pirate’s cove, it was ideal for hiding treasure, and stealing it.

Though it may be easy to think of offshore depositors as foreign outlaws, pirates or simply “Russians,” this is not nearly the case. Cyprus was a leader – in some circles and for some applications, the leader – in quiet storage, management and structuring of exceptionally large sums for private individuals and corporations all over the world. Cypriots were fast learners in the fields of global asset protection and “tax optimization.” (I do cringe to say these words.) Cyprus’ 2004 entrance into the EU gave financial operations a deeper veneer of legitimacy and security. All of this meant almost a decade of rapidly expanding business. This was surely from Europeans and Russians wary of unpredictable tax laws and indiscriminate, extralegal confiscations, but also from entities in North America and elsewhere.

The score itself is bigger than we can imagine and will be impossible to determine. The breadth of the depositor base and very nature of the business, the holding of particularly large deposits, gives us an inkling as to the size of the heist, but so does the brazen nature of the action. What we know is that it is government theft of a kind not seen since wartime Germany or revolutionary Russia. Accounts have simply been seized; portions of their untold contents, as we like to say in America, “redistributed.” And though the event has provided distracting local human-interest fodder for the world media, personal savings and such things as the operating accounts of small businesses represent a negligible portion of the dollar amounts involved. Some of the largest businesses and the richest, most powerful people and trusts in the world had money in Cyprus. And that is why nobody is talking.

Expect major instability and enduring shock waves. The implications of the heist, ominously called “precedent setting” by its own architects, are staggering. Of course, many will lose their savings, businesses will fail and the move will draw even more blood from the flaccid economy we have been enjoying since the last great stick-up. (I refer, of course, to the moment our politicians convinced us Wall Street needed $800,000,000,000.00 “by Tuesday.”) More important, depositors and investors worldwide will lose faith in their banks, in their governments and in the EU. The final result may please anarcho-capitalists and others who see this as irrefutable proof of the elemental wickedness of compound governments and central banking systems, but it will not be pretty. When power is over-extended and blatantly abused, people revolt, money moves off the books and producers turn to cleverer and more audacious means of piracy.

How much was stolen, after all? How many accounts were seized? Nobody likes to know a secret without getting all the details, but I don’t know all the details. Nobody does. That’s the point. All we know is that immeasurable sums have vanished, and the victims are quiet. It is a perfect crime.

You will never see a complete and verifiable list of beneficial account holders.

You will never see a complete and verifiable tally of the loot.

The best way to pull off a heist is to make it so nobody blows the whistle or calls the authorities. Better yet is to arrange things so the authorities are in on the job. Best of all, of course, is when the authorities do the job.

miércoles, octubre 24, 2012

In spite of years of harsh spending cuts and tax increases, Europe's debt problems are getting worse.

Figures from the EU's statistics office Wednesday showed that, at the end of the second quarter, the total government debt of the 17 countries that use the single currency was worth 90 per cent of the group's total economic output for the year — the highest level since the euro was launched in 1999.

The rise from the previous quarter's debt to gross domestic product ratio of 88.2 per cent, and the previous year's equivalent of 87.1 per cent, is a result of the eurozone's economic problems — which are making it harder for countries to handle their debts.

"The euro area economy remains stuck in a rut," said James Ashley, senior European economist at RBC Capital Markets.

According to Eurostat five of the countries that use the euro are in recession — Greece, Spain, Italy, Portugal, and Cyprus. Many analysts expect the eurozone to slip back into recession in the third quarter of the year when official figures are published next month. A recession is technically defined as two quarters of negative growth in a row.

Other figures Wednesday pointed to a deepening economic crisis in the eurozone. The purchasing managers' index — a gauge of business activity — from financial information company Markit fell from the previous month's 46.1 to 45.8 in October — its lowest level in more than three years. Any figure below 50 indicates a contraction in activity.

German business confidence slips

Meanwhile, a closely watched survey from the Ifo Institute found business confidence in Germany, Europe's biggest economy, confounded expectations of a modest increase and dropped for the sixth month in a row. Ifo's key figure for October dropped to 100 from 101.4 in September.

Germany has been the main reason why the eurozone has not fallen into recession. The country's powerhouse exporters, such as Volkswagen and BMW, have taken a slice of rising trade volumes around the world while its consumers have shown an increasing appetite to spend. However, the country's economy has recently lost its momentum as the debt troubles on its doorstep have weighed on economic confidence. More on CBC >>

lunes, octubre 15, 2012

Coming on the heels of the European Union being awarded the Nobel Peace Prize is the news that Switzerland is preparing its military to respond to possible escalations of violence related to the Euro crisis. "I can’t exclude that in the coming years we may need the army," Switzerland’s defense minister, Ueli Maurer was quoted as saying. NBC News also reported Maurer questioned how long “money alone” could quell the crisis. The Swiss Defense Ministry is not ruling out deploying troops:

“It's not excluded that the consequences of the financial crisis in Switzerland can lead to protests and violence,” a spokesperson told CNBC.com. “The army must be ready when the police in such cases requests for subsidiary help.”

It doesn’t appear that the Swiss are taking this as a too-far-removed possibility:

It launched the military exercise “Stabilo Due” in September to respond to the current instability in Europe and to test the speed at which its army can be dispatched. The country is not a member of the union or among the 17 countries that share the euro.

Swiss newspaper Der Sonntag reported recently that the exercise centered around a risk map created in 2010, where army staff detailed the threat of internal unrest between warring factions as well as the possibility of refugees from Greece, Spain, Italy, France, and Portugal.

Switzerland, which did not join the United Nations until 2002, by a referendum that only narrowly passed, has not been in a state of war since the Treaty of Paris in 1815, a treaty predating even some of the modern nation-states now in crisis in the European Union, which the Swiss also have no plans to join. In his foreign policy address last week, Mitt Romney ruled out the possibility of war in Europe thanks to the Marshall plan. Reason’s Matthew Feeney pointed out Romney’s right, even if only because few countries in Europe are even capable of waging a war. Whether they’re capable of resolving their crisis except through “money alone” remains an open question, as Switzerland’s maneuvers highlight.

Europa is being tipped to spend nearly $14 billion over the next 10 years on research and development of unmanned aerial systems and their procurement.

About $8.7 billion of that amount will be spent on R&D efforts, while about $5 billion will be for procurement. However, despite strides in developing its own unmanned aerial systems, much of the aircraft procured will come from outside the continent.

The predictions are part of a larger overall analysis of the UAS market worldwide by Forecast International, a U.S. market intelligence and analysis firm serving the defense, aerospace and security industries as well as government and military organization. More >>

The scholarly and journalistic
literature on the Cuban missile crisis of October 1962 is immense and
continues to grow. Though the majority of those now on campuses or in
newsrooms are too young to remember it, the confrontation between the
United States and the Soviet Union over Soviet missiles based in Cuba
brought the world to the brink of nuclear war and ranks with the
terrorist attacks of September 2001 and the assassination of John F.
Kennedy as the most traumatic single events (as opposed to prolonged
ones such as the war in Vietnam and the civil rights movement)
experienced by this country since the end of World War II. The 50th
anniversary of the crisis is about to be observed; that it continues to
fascinate us, including those who have no memory of it, should come as
no surprise.
As David Coleman points out in the preface to “The Fourteenth
Day,” the episode “is famously remembered as a thirteen-day crisis,” in
large part because “Robert Kennedy chose ‘Thirteen Days’ for [his]
memoir of the crisis” and because “much later, there was a Hollywood
movie of the same name.” But contrary to received wisdom, the
confrontation did not end in resounding triumph for the United States
when, on Oct. 28, Premier Nikita Khrushchev caved and agreed to pull his
missiles out of Cuba. Instead, as Coleman demonstrates, “Khrushchev’s
capitulation had not brought the finality to the crisis that many had
hoped for. A year after the crisis, just days before his assassination,
Kennedy was still referring publicly to ‘unfinished business’ from the
Cuban missile crisis.”
Coleman, who teaches history at the University of Virginia, adds little
to our knowledge of the period following Khrushchev’s decision, but he
adds nuances to our understanding of it because, as director of the
Presidential Recordings Program at the Miller Center in Charlottesville
and Washington, he has intimate knowledge of the tapes that Kennedy
made, “most likely in anticipation of one day writing a memoir,” in the
Cabinet Room of the White House between July 1962 and November 1963. At
Kennedy’s place at the conference table in that room there was,
“attached to the table, a discreet button . . . [that] allowed Kennedy
to stop and start the reel-to-reel tape recorder that was downstairs in a
basement room used for filed storage.” Apparently the only people who
knew about this system were his secretary, Evelyn Lincoln; “the Secret
Service agents who installed and maintained the system”; aide Kenneth
O’Donnell; and Robert Kennedy and his secretary. More >>

domingo, septiembre 23, 2012

September has been a good month for the euro-zone. Mario Draghi committed the ECB to buy unlimited amounts of sovereign bonds of troubled euro-zone countries. There are realistic plans for joint banking supervision. The German constitutional court backed the European Stability Mechanism (albeit with some reservations). And Dutch elections reaffirmed voters’ support for pro-Europe parties. There is a collective sigh of relief in Europe and around the world. European markets are rallying, and Spanish bond yields have already dropped and are expected to drop further in another auction on September 20.

So is Europe saved?

We think not. The problems underlying the European crisis were institutional. What we are seeing now are mostly short-term fixes, not true solutions to these institutional problems.

The roots of the crisis lie in the difficulty of operating a currency union without centralized fiscal authority. But that’s not all. The problem was made worse by implicit guarantees to markets concerning the sovereign debt of all euro-zone countries, which enabled Greece, Italy, Portugal and Spain to borrow at sharply lower rates than before. This then enabled the dysfunctional political economy in Greece, Italy and Portugal (and to some degree in Spain) to persist with borrowed money and transfers.

This is not to deny the role of the global recession in triggering the fiscal problems or the fear of contagion that increased the borrowing costs of Italy and Spain, plunging these countries into a more severe macroeconomic crisis. It is certainly not to deny that austerity measures have been counterproductive or that with the ECB balance sheet behind them, these countries and their banks will have some breathing room.

But the point remains that Europe’s underlying problems cannot be tackled by short-term fixes. For the euro to survive and contribute to European economic prosperity in the medium term, Europe needs to follow the example of the United States as it transitioned from the Articles of Confederation of 1781 to the U.S. Constitution, which entailed strengthening the currency union with debt renegotiation (with the federal government assuming state liabilities) and more importantly, meaningful fiscal centralization.

And yet, there is no realistic plan for true fiscal centralization in Europe. Fiscal centralization doesn’t just mean better monitoring Greece’s austerity plans. It means a European organization with the power to set taxes and harmonize labor, product and credit market institutions. But this is not possible without some centralization of political and military power. It was crucial that with the U.S. Constitution, political and military power shifted to the federal government.

This is not on the cards for Europe, not least because Greece or France or Spain wouldn’t accept the shift of economic, political and military power to Germany that this would entail. So for the time being, we have to make do with short-term fixes, and in all likelihood, Europe isn’t saved just yet.

martes, septiembre 04, 2012

Two years after eurozone began its downward financial spiral, the European Central Bank is about to unveil a widely-anticipated plan to pump more money into the system to stem a wider collapse.

But the plan, similar to the massive bond-buying undertaken by U.S. central bankers four years ago, may be too little, too late.

“It’s going to take a lot more than a few rate cuts here and there to give us a lift,” said Peter Dixon, a senior economist at Commerzbank Securities. “Monetary policy is effectively running out of options.”

Europe is also running out of time. Manufacturing across the continent contracted faster than previously thought last month, according to the latest data released Monday. The recession sparked by a crushing debt hangover in a few smaller members of the 17-nation bloc is now sweeping through Germany and France. The financial turmoil that sank Greece as investors and depositors fled now threatens the much larger economies of Spain and Italy.

European Central Bank President Mario Draghi bought some time last month, calming markets somewhat with a pledge to do "whatever it takes" to save the euro. Now, he has to deliver. On Thursday, the ECB is set to unveil details of a new bond-buying plan that has re-opened long-standing fault lines in Europe’s experiment with a common currency.

“You have the troubled nations -- Portugal, Italy Spain, Greece -- all lined up in one corner and you have the funding nations with capital -- Germany, Austria, Finland, the Netherlands -- lined up in the other corner,” said Mark Grant, an investment banker at Southwest Securities. “It’s going to be a very bloody battle on who gets what capital and in what form and how much.”

"You do not really understand something unless you can explain it to your grandmother" - Albert Einstein

"It is inaccurate to say I hate everything. I am strongly in favor of common sense, common honesty, and common decency. This makes me forever ineligible for public office" - H. L. Menken

"I swore never to be silent whenever and wherever human beings endure suffering and humiliation. We must always take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented" -Elie Wiesel

"Stay hungry, stay foolish" - Steve Jobs

"If you put the federal government in charge of the Sahara Desert , in five years ther'ed be a shortage of sand" - Milton Friedman

"The tragedy of modern man is not that he knows less and less about the meaning of his own life, but that it bothers him less and less" - Vaclav Havel